Kroc, Ray

Ray Kroc

In his career as a salesman and business owner, Ray Kroc not only took advantage of opportunities others offered him, he also made some of his own. Kroc saw that brothers Richard (died 1998) and Maurice McDonald (c. 1902-1971) had created something special with their San Bernardino, California, hamburger restaurant. Kroc used his skills to turn the McDonalds' formula into the world's most successful restaurant chain.

"I have always believed that each man makes his own happiness and is responsible for his own problems.… It follows, obviously, that a man must take advantage of any opportunity that comes along."

A Gift for Selling

Raymond Albert Kroc was born on October 5, 1902, in Oak Park, Illinois, just outside of Chicago. He was the eldest child of Louis Kroc, an employee of the telegraph company Western Union, and Rose, a homemaker. Kroc's mother earned extra money teaching piano, and her son shared her talent at the keyboard. Kroc was also fond of daydreaming; his parents sometimes called him "Danny Dreamer" after catching him lost in thought. In his autobiography, Grinding It Out, Kroc wrote that his daydreams were not wasted, because "they were invariably linked to some form of action."

Kroc's first leap into business was with a lemonade stand he ran while he was in grammar school. His next business venture was running a music store that he opened with two friends after his freshman year in high school. They shut the store after several months. Kroc also served customers at his uncle's soda fountain, selling ice cream and other refreshments. There, Kroc explained in his autobiography, he learned an important lesson: "you could influence people with a smile and enthusiasm and sell them a sundae when what they'd come in for was a cup of coffee."

After his sophomore year, Kroc left high school to become a door-to-door salesman. A few months later, with the United States involved in World War I (1914-18), he lied about his age so he could become a Red Cross ambulance driver, but the war ended before Kroc could serve in Europe. At seventeen, Kroc returned to sales and picked up extra income playing the piano. After a series of jobs, Kroc married his first wife, Ethel Fleming, in 1922, and began selling paper cups. He also ran a Chicago radio station, then tried selling real estate in Fort Lauderdale, Florida.

By 1927, Kroc was back in Chicago selling paper cups, determined to make his career in sales. In 1938, Kroc started selling a new product, a machine that could mix five milkshakes at once. He formed his own company, Prince Castle Sales, and began traveling the country selling the "Multimixer." Kroc struggled for a few years, and World War II (1939-45) forced a halt in sales. After the war, Kroc's company thrived. In one of his best years, he sold eight thousand mixers.

Ray Kroc went to a school in Connecticut to learn how to drive ambulances. One of his classmates was another young Illinois teen who lied about his age to get in: Walt Disney (see Walt Disney Company entry). Years later, when Disney opened Disneyland in California, Kroc tried to convince him to put a McDonald's in the amusement park. The effort failed, perhaps one of Kroc's few failures with McDonald's.

The Birth of McDonald's

In 1954, Kroc heard about McDonald's, a California hamburger restaurant owned by Richard and Maurice McDonald. Kroc learned they had five Multimixers and ran them almost without stopping. Kroc could not believe a restaurant
could sell so many milkshakes, so he went to see for himself. He quizzed the diners who filled the parking lot. They told him they enjoyed the inexpensive burgers and fries and often came to McDonald's. He also talked to the McDonald brothers, learning how they turned out food quickly so they could sell it cheaply. At one point, Kroc later wrote, "Visions of McDonald's restaurants dotting crossroads all over the country paraded through my brain." Each one, Kroc dreamed, would have five Multimixers, boosting his sales.

Kroc approached the brothers about expanding their chain nationwide. The McDonalds, however, resisted. They did not want the extra work it would take to launch such ambitious growth. Kroc said they could get someone else to run the chain for them. In his autobiography, Kroc recalled Richard McDonald's response: "'Who could we get to open them for us? " Kroc replied, "Well, what about me?" That conversation led to the birth of the McDonald's Corporation.

At the time, Kroc was fifty-two years old. His health had been poor in the past, and he suffered from diabetes and arthritis. His marriage was also shaky. (He and Ethel divorced in 1961, and Kroc remarried two more times.) But as Kroc wrote in his autobiography, "I was convinced that the best was ahead of me." After opening his first McDonald's in Des Plaines, Illinois, Kroc slowly added more restaurants. The McDonalds had created a system that gave each employee just one job, and the restaurant was planned to reduce their movements. Kroc followed this pattern in his restaurant. His goal was to have consistent quality, speed, and service at each McDonald's.

Ray Kroc and the McDonalds shared a desire for keeping their restaurants clean. If employees considered taking a break when business slowed, Kroc told them, "If you've got time to lean, you've got time to clean."

Key Business Practices

Kroc played a major role in spelling out certain procedures that guaranteed McDonald's success. He wanted the corporation to have control over its franchisees, the local business people who paid the corporation to run its restaurants. Other chains let franchisees buy the right to open as many stores in
a region as they could. Kroc sold his franchisees just one store so he could make sure they knew how to run a McDonald's the way he wanted it run.

But even as Kroc wanted control, he also made sure his franchisees did well. Their success served his interests, since the corporation earned money on their restaurants' sales. Kroc did not sell them supplies at high prices, as other restaurant chains did. He also trained franchisees in the McDonald's methods at the company's Hamburger University. As John Love writes in McDonald's: Behind the Arches, "In the end, the genius of Ray Kroc was that he treated franchisees as equal partners."

Kroc's other major contribution to McDonald's was his salesmanship. As he had learned at his uncle's soda fountain, he could convince people they wanted what he had to sell. Kroc poured money into advertising, especially on television. Ronald McDonald, the company's new mascot, was introduced on TV in 1965. John Mariani, in his book America Eats Out, said that within six years, Ronald "was familiar to 96 percent of American
children, far more than knew the name of the President of the United States."

Wealth and Charity

McDonald's became Kroc's company in 1961, when he gave the McDonald brothers $2.7 million for their share of the corporation. Four years later, he sold stock in the company. Over the years, Kroc's shares in McDonald's made him rich; he shared his wealth with others. He started the Kroc Foundation, which supported research on diabetes (which killed his daughter Marilyn in 1973), arthritis, and multiple sclerosis. On his seventieth birthday in 1972, Kroc gave $8 million to some of his top employees. Over the years, the corporation also donated food and money to many charities, and the company encouraged local franchisees to get involved in their communities. McDonald's best-known charitable effort is the Ronald McDonald Houses, homes near hospitals where families can stay for free while their children receive medical treatment.

In 1974, Kroc turned his attention from fast food to baseball, using his wealth to buy the San Diego Padres. A lifelong baseball fan, Kroc tried to turn around the struggling team. The Padres made the World Series for the first time in 1984, but Kroc did not live to see it. He died that January in San Diego at the age of eighty-one. After his death, his third wife, Joan, carried on his charitable work. She donated tens of millions of dollars to San Diego organizations, and in 1995 she gave $50 million to the Ronald McDonald Children's Charities, which had been founded in Kroc's honor.

The Man behind McNuggets

As he built his fast-food empire, Ray Kroc had important help from key employees. One of these people was Fred Turner. He worked the grills at the first McDonald's in Des Plaines, Illinois, training to open his own franchise. In 1957, he started working in Kroc's corporate office. He also helped start new restaurants, sometimes sweeping parking lots to make sure the franchises opened on time. Turner eventually became McDonald's chairman and chief executive officer (CEO), taking over for Kroc in 1977. Along the way, Turner helped introduce several new McDonald's products, such as Chicken McNuggets

For More Information

Books

Kroc, Ray, with Robert Anderson. Grinding It Out: The Making of McDonald's. Chicago: Henry Regnery Company, 1977.

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Raymond Albert Kroc

Encyclopedia of World Biography
COPYRIGHT 2004 The Gale Group Inc.

Raymond Albert Kroc

Raymond Albert Kroc (1902-1984) was a salesman who set up the first franchise of the McDonald brothers' drive-in restaurant. He bought the golden arches symbol from them and built the McDonald's chain based on the concepts of a limited menu of controlled quality and uniformity combined with massive advertising.

Ray Kroc was born in Chicago, Illinois, on October 2, 1902, the son of relatively poor parents. He went to public schools in Oak Park, Illinois, a suburb of Chicago, but did not graduate, leaving school to serve as an ambulance driver during World War I, like Ernest Hemingway, also from Oak Park. After the war Kroc became a jazz pianist, playing with the Isham Jones and Harry Sosnick orchestras. Upon his marriage in 1922 he went to work for the Lily-Tulip Cup Company, but soon left to become musical director for one of Chicago's pioneer radio stations, WGES. There he played the piano, arranged the music, accompanied singers, and hired musicians. Kroc's wanderlust was not satisfied with this, and the real estate boom in Florida soon found him in Fort Lauderdale selling real estate. When the boom collapsed in 1926 Kroc was so broke that he had to play piano in a night club to send his wife and daughter back to Chicago by train. He later followed them in his dilapidated Model-T Ford.

Kroc thereupon returned to Lily-Tulip as a salesman, later becoming midwestern sales manager. In 1937 he came upon a new invention, a machine that could mix five milk shakes at one time, called the "multi-mixer." Kroc founded his own company to serve as exclusive distributor for the product in 1941. Many years later, in 1954, Kroc heard of a drive-in restaurant in San Bernardino, California, owned by Richard and Maurice D. McDonald, which was operating eight of his multi-mixers. Curious as to how they could possibly use so many machines in a small establishment, Kroc found the brothers were doing a remarkable business selling only hamburgers, french fries, and milk shakes. Kroc, from his years in the paper cup and milk shake business, recognized a potential gold mine and approached the brothers about starting a franchise operation based on their restaurant, selling hamburgers for 15 cents, fries for 10 cents, and shakes for 20 cents. After some negotiation the McDonald brothers agreed. Under the arrangement, they would receive one-half of one percent of the gross, Kroc would use the McDonald name and concept, pledged to retain high levels of quality, and would retain their symbol—the golden arches. Ray Kroc opened the first of the
chain of McDonald's restaurants on April 15, 1955, in Des Plaines, Illinois.

Small by today's standards, this restaurant in Des Plaines (now the world's first "Hamburger Museum") was a little red and white tile affair where root beer was poured from a wooden barrel, potatoes were peeled in the restaurant, and there were local supplies of fresh hamburger meat. The symbol, now long forgotten, was Speedee, a hamburger-bun-faced creature. On that first day, Kroc's restaurant had sales of $366.12. By 1961 there were over 130 outlets, and in that year Kroc bought out the McDonald brothers for $2.7 million. From these humble beginnings emerged an empire which by 1984 had 8,300 restaurants in 34 countries with sales of more than $10 billion.

Ray Kroc revolutionized the restaurant industry in much the same way that Henry Ford transformed the automobile industry a generation earlier. Kroc's great contribution was to figure out how to mass-produce food uniformly in astounding quantities, and then to convince millions of Americans that they needed to buy this food. To accomplish the first objective, Kroc reduced the food business to a science. Nothing was left to chance in the logistics of the McDonald's operations, which were carefully researched by sophisticated methods. The precision of the operation can be appreciated when it is understood that each McDonald hamburger was made with a 1.6 ounce beef patty, not more than 18.9 percent fat. It is exactly .221 inches thick and 3.875 inches wide. All other aspects of the operation are equally rigidly controlled. Kroc also relentlessly stressed
quality, banning from his hamburgers such filler materials as soybeans.

The other side of the McDonald's success story is franchising, marketing, and advertising. Three-quarters of McDonald's restaurants are run by franchise-holders. By 1985 each franchise cost about $250,000 and ran for 20 years, after which it reverted to the company. When choosing franchise-holders, Kroc always looked for someone good with people. As he said," … we'd rather get a salesman than an accountant or even a chef." The franchise owners were then intensely trained at McDonald's "Hamburger University" in Elk Grove, Illinois, where a training course led to a "Bachelor in Hamburgerology with a minor in french fries." The company also provided a lengthy manual that outlined every aspect of the operation, from how to make a milk shake to how to be responsive to the community. The capstone of the McDonald's operation, however, was advertising. Hundreds of millions of dollars were poured into advertising—to the point where the head of another fast-food company said in 1978 that consumers were "so preconditioned by McDonald's advertising blanket that the hamburger would taste good even if they left the meat out."

Despite its astounding success, and despite the fact that the company worked hard to project a charitable and community-oriented image, McDonald's came under attack on several fronts. A number of communities refused to allow its restaurants in their area, seeing it (as one commented) as a "symbol of the asphalt and chrome culture." The company was also criticized for its extensive use of part-time teenaged help, and especially for the $200,000 which Kroc donated to Richard Nixon's re-election campaign, since the administration soon after recommended amending the minimum wage law to provide for a "youth differential." This would have allowed employers to hire teenagers at 80 percent of the minimum wage. The architecture of the buildings and the nutritional content of the food was assailed, although nutritionist Jean Mayer said that as "a weekend treat, it is clean and fast."

In the mid-1970s Kroc turned his energy from hamburgers to baseball, buying the San Diego Padres. He had less success at this, however, and in 1979 gave up operating control of the team, saying with his typical crustiness, "there's a lot more future in hamburgers than in baseball. Baseball isn't baseball anymore." In the years before his death he and his second wife, Joan, set up foundations to aid alcoholics and established Ronald McDonald houses to help the families of children stricken with cancer.

Kroc cut a commanding figure, his thin hair brushed straight back, his custom blazers impeccable, the bulky rings on his fingers glinting as he ate his hamburgers with both hands. Aware of his abrasiveness, he once commented: "I guess to be an entrepreneur you have to have a large ego, enormous pride and an ability to inspire others to follow your lead." He died in San Diego on January 14, 1984.

Further Reading

Kroc's autobiography, Grinding It Out (1978), is of some interest. A more critical perspective is provided by Max Boas and Steve Chain in Big Mac (1976). □

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Kroc, Raymond Albert

Gale Encyclopedia of U.S. Economic History
COPYRIGHT 2000 The Gale Group Inc.

KROC, RAYMOND ALBERT

Raymond Albert Kroc (1902–1984)had the energy, the salesmanship, and the inspiration to build the greatest international restaurant chain empire in the world, McDonald's Corporation. He was a genuine pioneer of the modern fast-food restaurant business. He took the assembly-line methods of big industry and applied them to a restaurant franchise business that produced a small, standardized menu at low cost to the consumer. Kroc was a super salesman who, at age 52, bought "the golden arches" symbol and the name from the McDonald's brothers drive-in restaurant of San Bernardino, California, to build the McDonald's chain of restaurants. Based on the concepts of a limited menu of controlled quality and predictable uniformity, Kroc's restaurants operated on the credo of "quality, service, cleanliness, and value," and used a massive advertising campaign to promote itself.

In 1902 Kroc was born in Chicago, Illinois, the son of relatively poor parents. He went to public school in the Chicago suburb of Oak Park, but did not graduate from high school. Instead, he left school to open his own music store. When World War I (1914–18) began, Kroc lied about his age in order to serve as an ambulance driver for the American Red Cross (like his neighbor in Oak Park, author Ernest Hemingway).

Kroc, passionate about music as a young man, returned to Illinois after World War I to become a jazz pianist, playing with at least two well-known jazz orchestras. He also became the musical director of one of Chicago's pioneer radio stations, WGES.

Yet, in 1924, a restless Kroc, dissatisfied with the outlook for a career in music, decided to become a salesman. During a period of booming development in Florida, he left Chicago to try his hand at selling real estate in Fort Lauderdale. The boom collapsed in 1926, and Kroc returned to Chicago with his first wife and their child. In Chicago, Kroc became a salesman for the Lily Tulip paper cup company, where he later became Midwestern sales manager, and developed strong promotional and sales skills.

In 1937 Kroc ran into an invention that captured his imagination—a machine called a "multimixer" that could make five milkshakes at a time instead of just one. At a time when milkshakes were very popular, Kroc saw the potential in this invention. By 1941 he had left Lily Tulip and founded his own company to serve as the exclusive distributor for the multimixer. It was a successful business that made Kroc modestly wealthy, but it was not the one that would bring him legendary greatness as an entrepreneur.

Kroc became intrigued with one of his multimixer clients, the McDonald brothers, who owned a drive-in restaurant in San Bernardino, California. The brothers used eight of his mixers at once. A curious Kroc traveled to California in 1954 to find out why so many mixers were being used by this single drive-in.

Kroc discovered the brothers McDonald sold just three items: hamburgers, French fries, and milkshakes. Moreover, the "restaurant" only had walk-up windows. The McDonald brothers were specializing in the first "fast food" service.

Kroc marveled at the efficiency of the operation. He was certain he had stumbled on that "once in a lifetime opportunity." The McDonald brothers agreed with Kroc's suggestion that he should open a national chain of their restaurants. The energetic 52-year-old veteran salesman entered into a franchise arrangement with the brothers and in 1955 opened his first store in Des Plaines, Illinois. Kroc quickly opened many franchises and oversaw quality control with an iron hand. His practice of purchasing the land used by the franchises for their operations, not leasing, eventually made McDonald's one of the largest real estate owners in the world.

By 1971 Ray Kroc had bought out the McDonald brothers' share of the business and became the sole owner of McDonald's Corporation. Kroc publicized his business relentlessly using every kind of advertising. Early in his career as Chief Executive Officer (CEO) of the business Kroc said, "I put hamburgers on the assembly line." His stores were not restaurants. Instead they were designed for frequent customer turnover. He forbade the installation of telephones, jukeboxes, or anything that encouraged loitering in the establishment.

Kroc opened his "McDonald's University" in 1972, where every new franchise owner trained in McDonald food production techniques. The school became known as "Hamburger University."

The company used national advertising in every available medium during the 1960s, when McDonald's clown-spokesman, "Ronald McDonald," was born.
Television advertising was aimed at both children and adults. The McDonald's brand name had an enormous impact on America's cultural fabric. The golden arches became the second most widely recognized trademark, behind Coca Cola.

The company is striking success. Some labor experts estimated that McDonald's was the first place of employment for one in fifteen Americans. Fast-food industry observers estimate that 96 percent of Americans have eaten at McDonald's at least once.

The company founded its international division in 1969. At the end of the twentieth century the international division provided 50 percent of McDonald's operating income, putting the "golden arches" into 85 countries, and adding $30 billion to its annual income.

McDonald's is also known for its philanthropy, including the creation of Ronald McDonald Houses, which provide live-in facilities for family members of seriously ill, hospitalized children. These residences, which are often near hospitals, have been a great help to the parents of the terminally ill.

In 1984 Ray Kroc died of heart failure at the age of 81. He was survived by his third wife. One of America's most successful entrepreneurs, Kroc is often thrust into the pantheon of American business world that includes Henry Ford, Andrew and Dale Carnegie, John D. Rockefeller, and J.P. Morgan.

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Kroc, Ray

Nutrition and Well-Being A to Z
COPYRIGHT 2004 The Gale Group, Inc.

Kroc, Ray

American businessman
1902–1984

Raymond Albert Kroc was born in Oak Park, Illinois, to Luis and Rose Kroc. He had two younger siblings, Robert and Lorraine. As a child, his mother called Ray "Danny Dreamer" because he would daydream all the time. Rose Kroc was a piano teacher, and she taught young Ray to play.

Kroc's first job was with his uncle, Earl Edmund Sweet, in a soda fountain the summer before he started high school. The next summer Ray dropped out of school, and he used the money he made the previous summer to rent a building with two friends. They sold sheet music and small instruments, but after a few months the business failed.

During World War I, Kroc lied about his age and became an ambulance driver for the Red Cross. He returned to Chicago after the war and held various jobs, including work as a jazz pianist and as a real-estate salesman. In the summer of 1919, Ray played in a band at Paw-Paw Lake, Michigan, where he met his future wife, Ethel Flemming. Ray and Ethel married in 1922, but only after he satisfied his father's requirement of getting a steady job—selling paper cups for the Lily Tulip Cup Company, where he worked for seventeen years.

In the early 1940s, Kroc became the exclusive distributor of a multimixer that could mix five milk shakes simultaneously. Two of his best customers were the McDonald brothers, Richard and Maurice (Mac), who bought eight of the mixers for their fast-food restaurants. The McDonalds had started with a group of hot-dog carts, and now had a chain of restaurants—for
which Richard McDonald designed the "golden arches" logo and the "number-of-hamburgers-sold" sign.

In 1954, Kroc went to San Bernardino, California, to see the McDonald brothers' restaurant, which used an assembly-line format to prepare foods. Kroc decided to set up a chain of drive-in restaurants based on the McDonalds' format and convinced the brothers to sell him the rights to franchise McDonald's restaurants nationwide. His first restaurant opened on April 15, 1955, in Des Plaines, Illinois. Kroc also began selling franchises on the condition that the owners managed their restaurants. Kroc was known for his obsessive cleanliness, and he wanted the restaurants kept very clean. In 1961, Kroc bought out the McDonald brothers for $2,700,000. At this time he had established 228 restaurants, and sales had reached $37,000,000. By 1963 more than 1 billion hamburgers had been sold.

Kroc served as the company's president from 1955 to 1968, as chairman of the board from 1968 to 1977, and as a senior chairman from 1977 until his death. He also was the owner of the San Diego Padres professional baseball team. Kroc died on January 14, 1984, in San Diego, California. He
is remembered as a pioneer in the fast-food industry, and was named as one of Time magazine's "Builders and Titans" of the twentieth century.

McDonald's Worldwide

By 2004, McDonalds had become a $40 billion global enterprise with more than 30,000 restaurants in 120 countries and more than half its sales outside the United States. International outlets are adapted to local cultures. In Saudi Arabia, for example, single men are seated separately from women and children. Indian McDonald's restaurants serve no beef or pork, but feature instead such menu items as a Chicken Maharaja Mac, a Paneer Salsa Wrap, and a McAloo Tikki Burger. In Japan, where the "r" sound is difficult, Ronald McDonald goes by the name Donald McDonald. As the chain faces slowing sales in a mature domestic market, the pace of its international expansion has increased. In China, where there are already 500 McDonald's, the chain plans to open more than 100 new branches a year. The company has become a major employer worldwide, with more than 1 million employees. However, despite (or because of) its international success, McDonald's has frequently come under attack as a symbol of American cultural imperialism. In 2000, anti-globalization protesters in a French farm town smashed windows in a half-built McDonald's franchise, highlighting the struggle between small farmers and big business in the global agriculture market. And after the United States began bombing Afghanistan in 2001, McDonald's outlets in Pakistan and Indonesia were vandalized. Attacks on McDonald's have been recorded in more than 50 countries.

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Kroc, Ray

The Columbia Encyclopedia, 6th ed.

Copyright The Columbia University Press

Ray Kroc (Raymond Albert Kroc), 1902–84, American fast-food restauranteur and franchiser, b. Chicago. Kroc held several jobs before becoming (1937) the distributor for a blender that simultaneously prepared several milkshakes. Visiting a small but profitable San Bernadino, Calif., restaurant owned by brothers Mac and Dick McDonald, he was impressed by the fast assembly-line fashion preparation of burgers, fries, sodas, and shakes. Kroc acquired the business's franchising rights and in 1955 founded the McDonald's Corp. Six years later he bought out the brothers. Using quality, service, cleanliness, and value as a commercial mantra, and maintaining strict uniformity of product, McDonald's grew quickly, as franchises opened throughout the country and menu items were gradually added. Kroc served as president (1955–68), chairman of the board (1968–77), and then senior chairman until his death. By then, McDonald's had changed America's eating habits, with more than 7,500 restaurants in operation and annual sales topping $8 billion.

See his Grinding It Out: The Making of McDonald's (1977, repr. 1990).

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